How To Transform Your Finances in 12 Months


I’ve said it before and I’ll say it again: financial strategies are better than financial plans.

This is a mindset the focuses on developing good financial habits instead of worrying about every penny. This way you reap all the rewards of consistency, while still being open to new opportunities and resilient to unexpected setbacks. So instead of worrying about the numbers, I hope you approach the next 12 as an opportunity to hone good financial behaviors instead of trying to hit arbitrary goals — I promise, you’ll far surpass the goals if you have the right methods in place.

Below are a few suggestions!

Make a flexible budget

A flexible budget slightly overestimates variable expenses, includes a buffer for miscellaneous or unexpected costs, and includes spending money for leisure and fun.

The easiest way to make your budget work is to earn more money. But the second easiest way is to simply be realistic about where and how you spend your money that makes you happy — and keep doing that.

Maybe you’ve calculated that you can get to debt-free by the end of this year so long as you don’t buy any new clothes for the next 12 months. This is a terrible plan. You’re better off extending your debt-repayment by an additional 3 months and working a small clothing budget into your monthly spending. Likewise, cutting lattes out of your budget might make you a gajillionaire, but you’ll be unhappily uncaffeinated, so I wouldn’t risk it.

The spending you should cut back on are things you don’t really like or need. If you’re always throwing out food at the end of the week, adjust your grocery budget and meal plan so you don’t spend as much on food. If you go out on Friday nights and somehow always end up starting a tab, switch to leaving your credit card at home and only taking a fixed amount of cash with you.

When it comes to making a budget that works, your real battle isn’t against a lack of funds, it’s against the feeling of deprivation.

Play to your strengths

In the years I’ve been managing my finances, I’ve learned I cannot be trusted to execute anything on will alone, but I will move mountains to accommodate an automatic, scheduled transaction.

This means in the time I was paying off my student loans, I couldn’t necessarily be counted on to put extra money towards my debt if I had it, but if scheduled an automatic transfer to my student loans, there was nothing that could make me cancel it. So I scheduled automatic extra payments towards my loans, even when I had no idea where the money was coming from. When the impending transfer was creeping closer and I didn’t have the cash, I scrambled for a way to make it: extra tutoring, selling something on Kijiji, etc. Even if I rushed the cash to the bank in the 11th hour, I always made it.

Now whenever I want a financial goal to happen, I schedule it and then find a way to make it work.

This might not work for everyone. In fact, what I just explained probably gave you an immense amount of stress on my behalf. Your financial strengths might be in planning out your financial goals and then following monthly or weekly steps, or adopting a minimalist approach to stuff so you spend less overall. Maybe you’re terrible with credit cards, but excellent at staying on budget with cash. Whatever you do well, do more of it.

Commit to learning more about money

When I first became interested in personal finance, I couldn’t get enough of it. I read a dozen books and was still thirsty for more. Now I maybe skim 1 or 2 personal finance books per year. But I realized that there’s still more for me to learn, particularly about investing which seems to be a never-ending financial literacy journey, so that’s where I’m putting my focus this year. I’m going to try to read at least 5 investing books in 2017, plus whatever other personal finance books that come my way.

Like most things, money is less intimidating the more you know about it, so the best way to overcome your fears and doubts, is to learn more.

Furthermore, one of the best things you can do is to expose yourself to a number of different financial philosophies and strategies (like the Snowball vs. the Avalanche method for paying off debt) so you can find the right fit for you. Trust me, there are as many ways to manage money as there are people in the world, and a individual approach blended with good common sense and expert opinion is the best you can get.

Save more than you think you can afford

Saving money is more important than anything. It’s more important than earning more (because earning more is useless if you can’t save), it’s more important than debt repayment (because you can always move money from savings to debt but never the other way around), and it’s more important that whatever thing you think you want to buy right now.

Saving trumps everything.

… and most people are terrible at it.

Most people are terrible at saving money because it isn’t easy to do. It’s difficult and annoying and takes money away from spending on fun things, and that makes you sad. But you have to do it. It is not optional.

Since saving money is going to hurt no matter what, you might as well make it hurt enough to count.

What I mean by that is don’t put saving last. When evaluating your paycheque, don’t save whatever feels “comfortable”. In fact, strive to be uncomfortable. The more uncomfortable the better. If you think you can probably save $300/mo, then strive to save $400. You’re going to have to move some things around to accomplish this: maybe cancel cable to spend less money dining out. But you’ll do it, and then you’ll find out it’s easier than you think. You’ll also find that it’s a lot more fun to finish the year with $4,800 in the bank instead of only $3,600.

The next 12 months are going to go by fast. Many things are not going to go as planned, but your finances don’t have to be one of them.

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18 Comments. Leave new

  • It’s funny because while saving might hurt at the beginning, it becomes addictive over time! After graduating from college I could only afford to put $5 in savings each week, but I’m sure glad I did. I went a month without a paycheck once and my measly savings kept me fed and out of debt.

    This year I’d really like to learn more about investing. We’re still getting out of debt, so it doesn’t make sense for us to start investing heavily yet, but I want the knowledge foundation to be there before we start investing.

  • Love your saying, “Financial strategies are better than financial plans.” So true! Your strategy to schedule automatic extra payments to pay off your student loan debt is a perfect example. Using accelerated or biweekly payments is among the options to explore for people who want to learn more about the many different ways to manage their money.

  • Great post, Bridget!

    I really like your points about saving over debt repayment and that it’s okay to extend repayment goals.

    I started with a $17,000 student loan in December 2015 and wanted it paid off by December 31, 2016. Unfortunately I still have $3,700 left to pay but all the extra payments have gone towards school again. I’m currently going back part-time and trying my very best to pay as I go. I have been fighting myself to put my extra debt payments towards saving for school and although it’s been tough to not hit my repayment goal, I know its for a good reason.

  • What five books are you planning on reading this year? It’s been a while since I’ve done a finance related book. Last year I was all about the Harvard business review’s best reads. Ended up going thru 5-6 of those. I’d recommend them for anyone looking to get ahead in their office.

  • Christian Gonzales
    January 4, 2017 12:30 pm

    I’d love to hear if any of the finance books you read stood out! Could definitely use some recommendations in this area 🙂

  • “When it comes to making a budget that works, your real battle isn’t against a lack of funds, it’s against the feeling of deprivation.”

    TRUTH. Feeling deprived is what makes you binge, whether it’s shopping binge, food binge, drinking binge, etc. Love this post – I finished it feeling determined and inspired for a new year.

  • “When it comes to making a budget that works, your real battle isn’t against a lack of funds, it’s against the feeling of deprivation.” This spoke to me so much! It’s really about your mindset.

  • Great post! I feel the same way about automating my finances. I’d like to think I’m disciplined when it comes to managing money, but making my saving/investing automatic males it 100 times easier.

  • Mrs. Picky Pincher I so agree that saving is addictive. When I started my first job I could only afford to save $50 a month. Eventually though I realized if I tried hard enough I could save $100. Then I was suddenly addicted to the experience. Now I try to save over $300 a month and I feel like every month I try to push myself harder. The end of 2016 showed me that saving really is amazing when you see the end results.

  • Definitely a fan of over budgeting. Confession time- I don’t actually have a dedicated emergency fund. However, all my budget categories have been so over budgeted that they all function as mini emergency funds. The only issue now is that I really should move some of that cash to higher yielding investments.


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